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Inventory Levels Continue to Grow in May

Active listings on ""Redfin"":http://www.redfin.com/ continued to grow between April and May, the brokerage reported.

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According to Redfin, listings increased 4.2 percent in May, adding to April's 6.4 percent growth. While total inventory was still down 22 percent year-over-year in May, that was still an improvement compared to January's 32 percent annual drop.

""Increasing home prices are giving more sellers sufficient equity to sell, and sellers who already had equity are being lured into the market after seeing their neighbor's homes [COLUMN_BREAK]

sell in record time and in fierce bidding wars,"" said Redfin analyst Tim Ellis. ""If the current trend keeps up, we may hit positive year-over-year inventory before the end of the year.""

According to the company, some markets are already ahead of the curve: Phoenix turned in a 14.1 percent year-over-year increase in May, while Chicago came in 0.4 percent ahead of last year. On the other hand, markets like Los Angeles, California's Inland Empire, and Boston still have a ways to go, with inventory down more than 40 percent in all three areas.

Another promising trend over the last several months is the growth in new listings, which have turned around from a 10 percent yearly decline in January to a 15 percent rise in May.

""We've still got a long ways to go before the market gets to anything resembling a 'normal' selection, but these inventory increases in the last two months are great news for buyers who have been frustrated by the severe lack of selection earlier in the year,"" Ellis said. ""An increase in the number of homes for sale will drive sales volume and in turn the overall economy. As supply and demand are brought back into balance bidding wars will ease and price gains will moderate.""

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